Going through a divorce is tough, and reorganizing your finances is one of the biggest challenges. If you need a new vehicle during this time, like an electric vehicle (EV), it can feel overwhelming. The good news is that securing an EV loan after a divorce is absolutely achievable. It just requires a bit of planning to navigate your new financial landscape.

How Divorce Can Impact Your Credit and Finances

When you were married, you likely shared bank accounts, credit cards, or even a car loan. From a lender's perspective, these joint financial products tied your credit histories together. During and after a divorce, untangling them is crucial.

• Joint Debt Responsibility: In Canada, even if a separation agreement says your ex-spouse is responsible for a joint loan payment, lenders can still hold you accountable if they miss a payment. A late payment on a joint account will negatively affect both of your credit scores.
• Change in Household Income: Lenders assess your ability to repay a loan based on your income versus your debts (your debt-to-income ratio). After a divorce, you're applying based on a single income, which will change the amount you can comfortably borrow.
• Building Individual Credit: If most of your credit history was tied to joint accounts, you might need to establish a stronger credit file under your own name.

Steps to Prepare for an EV Loan Application Post-Divorce

Taking control of your finances is the most powerful step you can take. Before you start looking at that new Tesla or Bolt, get your financial house in order.

1. Get a Clear Financial Snapshot

First, you need to know exactly where you stand. This isn't the time for guesswork. Pull your credit reports from both Equifax Canada and TransUnion Canada. You are entitled to a free copy from each bureau every year. Review them carefully for:

• Any joint accounts that are still open.
• Errors or inaccuracies that need correcting.
• The overall health of your credit score.

Next, create a detailed personal budget based on your new, single-income reality. Account for housing, utilities, support payments (either paid or received), and daily living costs. This will show you how much you can realistically afford for a monthly car payment.

2. Formally Separate Your Finances

This is a critical step. Work to close all joint credit cards and lines of credit. If you have a shared car loan or mortgage, work to have it refinanced into one person's name. Removing your name from these shared debts ensures your credit score is no longer affected by someone else's payment habits.

3. Strengthen Your Individual Credit Profile

If your credit score took a hit during the separation or if you have a thin credit file on your own, focus on rebuilding. A few simple actions can make a big difference:

• Make all payments on time: Your payment history is the single biggest factor in your credit score.
• Consider a secured credit card: If you're having trouble getting approved for a traditional credit card, a secured card is an excellent tool for building a positive payment history.
• Keep credit card balances low: Try to use less than 30% of your available credit limit on any individual cards.

Applying for Your Electric Vehicle Loan

Once you've done the prep work, you'll be in a much stronger position. When you apply, lenders will be looking at your individual financial health.

The Importance of a Down Payment

A significant down payment is your best friend in this situation. It reduces the total amount you need to borrow, which results in a lower monthly payment and makes you a less risky applicant in the eyes of a lender. It shows financial stability and can help you get approved with a better interest rate, even if your credit isn't perfect.

Factor in EV Rebates

Don't forget to look into federal and provincial EV rebates available in Canada. The federal iZEV program and various provincial incentives can significantly lower the purchase price of a new or used EV, meaning you'll need a smaller loan to cover the cost.

Consider All Your Options

Your first car post-divorce doesn't have to be your dream car. Be realistic about what your new budget can handle. A reliable used EV can provide all the benefits of electric driving with a much more manageable monthly payment, helping you stay financially stable as you start your new chapter.

Getting an auto loan after a divorce is a fresh start. By taking these steps, you're not just preparing for a car loan; you're building a solid financial foundation for your future.